Artificial Intelligence Offers Gulf a $260 Billion Opportunity

Waleed Mansour – Strategy&, part of the PwC network, has warned that Gulf countries face growing economic and strategic challenges in securing critical choke points in the global artificial intelligence (AI) ecosystem, given the region’s reliance on a limited number of international providers for chips, cloud computing, and advanced models. A new report by the firm emphasizes that ensuring continuous access to these technologies, infrastructure, and capabilities will be crucial for Gulf states to capture a massive economic opportunity linked to AI, estimated at around $260 billion by 2030.

It notes that the rapid rise of the Gulf Cooperation Council (GCC) countries as prominent players in the global AI race has created a challenge centered on safeguarding access to the technologies and capabilities upon which these economic gains depend. The global AI value chain includes choke points ranging from advanced semiconductors and physical infrastructure to cloud platforms, sophisticated models, and specialized talent, with a significant portion of these capabilities concentrated among a small number of global providers.

**Economic Sovereignty and Pragmatism**

Strategy& argues that addressing these risks does not mean Gulf countries should seek to independently own and operate every link in the AI value chain. Over-localizing components of the ecosystem could create new vulnerabilities and increase the fragility of certain capabilities. Instead, the firm advocates adopting the concept of “pragmatic AI sovereignty,” which balances strategic control over critical capabilities with ensuring continued access to the rest of the value chain during crises and disruptions. This means securing access to technology where necessary, and exercising direct control when strategic interests are at risk, while investing in areas where Gulf economies can retain a larger share of the value generated by AI.

**Investment Focus**

The report stresses that the global focus on securing advanced chips and graphics processing units (GPUs) does not, on its own, reflect the true scale of the challenge. Leading in AI requires ensuring access across five interconnected layers: semiconductors and hardware, infrastructure and connectivity, cloud platforms, models and intelligence, and AI systems and their sectoral applications. These layers, in turn, depend on three key enabling factors: talent and human capital, cybersecurity and digital resilience, and data sovereignty and privacy.

Risks are clearly evident in the degree of global concentration. Approximately 75% of semiconductor manufacturing is located in East Asia, making supply continuity vulnerable to geopolitical and economic risks. In the cloud computing market, the top three hyperscalers control about 65% of the global cloud infrastructure market, while the development of advanced AI models is concentrated among a limited number of major corporate labs.

**Value Leakage**

The repercussions of losing access to these capabilities extend beyond the technological realm. The report warns of value leakage, where a portion of the economic value generated by AI flows to chip providers, cloud computing firms, model developers, and platform owners outside the region. This is compounded by the risk of potential external restrictions on chips, models, and cloud services, exposure to foreign jurisdictions, and the evolving nature of technology regulations. Consequently, ensuring access to AI capabilities has shifted from a technological issue to an element directly linked to economic security and the ability of Gulf economies to protect their investments and future returns.

**Local Returns**

The report emphasizes that pragmatic sovereignty should not be limited to hedging against supply disruptions; it should also help Gulf countries retain a larger share of the economic value created by AI. The GCC has the opportunity to transition from consuming technology to producing commercially viable AI solutions, alongside managed services and specialized platforms. Government and state-owned enterprise demand can play a key role in scaling priority solutions, providing a market for testing and validating technologies, and then transforming successful local solutions into exportable products and services.

**Revisiting Markets**

The report identifies six key sectors where the region can develop specialized AI capabilities: government, energy, finance, health, logistics, and defense. Seizing these opportunities requires building local expertise in adapting and evaluating models, and developing solutions that place the Arabic language at the core of their design. This would give Gulf countries the chance to build a competitive advantage that extends beyond the local market.

Thus, an AI security strategy can become a lever for growth and investment, helping Gulf countries protect the $260 billion opportunity, build new local industries, increase value addition, and gradually shift from importing AI solutions to producing and exporting them.